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Emerging Market Links + The Week Ahead (September 18, 2023)
China's slow-burning insurance crisis + auto exports undermine EM manufacturing, TikTok shop’s chaotic “Project S,” Milei's plan to fix Argentina, EM stock picks & the week ahead for emerging markets
As mentioned in some of the fund manager interviews covered in our Tuesday posts, Chinese auto exports are becoming a threat to the world and especially to Europe. Without an auto industry, Europe would rapidly deindustrialize and unemployment will skyrocket. However, an article in this week’s post noted how Chinese exports of internal combustion engine (ICE) cars are mostly going to Russia, Eastern Europe, and developing countries in Asia and Latin America - undermining the competitiveness of manufacturers in those regions.
In addition, Caixin has reported how China’s insurance sector is said to be turning into a slow-burning crisis for regulators. Apparently, many private insurers have been engaged in risky activities and are linked to troubled financial conglomerates.
Meanwhile and as mentioned last week, Argentina’s next president could be Javier Milei. Tucker Carlson recently went to Argentina for an unfiltered view of him and the mess that Argentina has become. Besides dollarization, Milei has laid out a detailed and pragmatic plan on how to fix the troubled country - including the privatization or closure of all state-owned companies and a significant reduction in public spending.
Finally, I am doing a lengthy post covering the lesser known stock holdings of some Brazil ETFs that don’t get much coverage in fund letters (or are widely held by funds), but its taking longer than expected to add quote links, descriptions, etc. before going through and cutting and pasting stock charts + forward P/E & dividend stats. Expect the post later this week…
$ = behind a paywall
Korean IPOs + stocks: NAVER, KoreaGasCorp (KOGAS), Jin Air, Pan Ocean, Ray Co, Kolmar Korea, HMM, Classys, Wemade, SK Biopharmaceuticals, Cosmax, PearlAbyss Corp, Neowiz, Hanon Systems, InBody, Krafton, SKC, NCSoft Corp, Dentium, Vatech, JejuAir Co, Kiwoom Securities, SOCAR, SK Telecom, LG Uplus, Netmarble Corp, Lotte Chemical, Samsung Securities, CJ Logistics, KT Corp, Korea Investment Holdings, Kumho Petrochemical, Nexon Games, Korean Air, Vieworks, Kakao, Kakao Games, Yuhan Corp, KakaoBank, Koh Young Technology, Hyundai AutoEver, and LG Display.
Emerging Market Stock Picks / Stock Research
$ = behind a paywall
After announcing full year results, one investment bank revised down share price target excessively (we will look at reasons). On Monday, HSBC also announced adjustment of mortgage rate cap
These 2 events caused a sell-off in the property sector, SHKP, in particular, was down 10% and trading at HKD80 per share. We think it is overdone
At this valuation, market is pricing in super bearish scenario. At 0.38x P/B, I think it is a bargain to buy now. It is a value trade.
🇭🇰 An open letter to the Board of Allan International Holdings (0684.HK) (Webb-site Reports)
I have been an excessively patient investor in Allan International Holdings Limited (HKG: 0684) for over 23 years, first buying shares at the turn of the century on 24-Jan-2000, disclosing a 5% shareholding on 1-Apr-2003 when the disclosure threshold was reduced from 10% to 5%, and gradually increasing my holding to the current position of over 12%. I even made Allan the 2003 Webb-site Christmas Pick, although I did write at the time:
"the group had net cash (including held-to-maturity securities, time deposits, money-market funds and bank balances), after paying the final dividend, of about HK$172m, or about $0.51 per share. We have urged them to pay out the surplus as a special dividend, to improve the return on equity and the total return for investors, including the Cheung family."
Since then, you have hoarded more and more equity, dabbled in investments in which you have no expertise and bought an investment property which is non-core to your business of "manufacturing and trading of household electrical appliances". That core business, which is 60 years old this year, has apparently gone into sunset mode.
🇨🇳 ZJLD Group (6979 HK): More Near-Term Upside Expected (Smart Karma) $
ZJLD has one of the best channel inventory and distributor perception among all the sauce aroma baijiu brands currently.
Expect further share price upside mainly from southbound buy, as the baijiu sector is one of the most followed sectors in A-share.
🇨🇳 Haitian Flavouring (603288 CH): Weakening Moat With Further Derating Likely (Smart Karma) $
Both catering and home consumption segments are faced with structural growth pressures that are difficult to solve for the company.
Expect further earnings weakness and derating in valuation multiple in the near term.
🇨🇳 Health And Happiness (1112 HK): Strong Growth From Nutritional Supplements (Smart Karma) $
The company currently trades at 5.3x 2024E PE - still valued as a Chinese infant formula company and not a growing and more global nutritional supplements company.
As the company continues to deliver growth in the nutritional supplements business, rerating will come eventually.
🇨🇳 Innovent Biologics Placement - Has Ample Cash but the Discount Is Enticing (Smart Karma) $
The company has undertaken a number of deals in the past, with the overall results being mixed.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.
🇨🇳 Biem.L.Fdlkk – Investment Presentation (Jenga I.P.)
The past decade has seen Chinese apparel brands such as ANTA Sports Products (HKG: 2020 / FRA: AS7 / OTCMKTS: ANPDY / ANPDF), Li Ning (HKG: 2331 / FRA: LNLB / LNL / OTCMKTS: LNNGY / LNNGF), Bosideng International Holdings limited (HKG: 3998 / FRA: 3BD / OTCMKTS: BSDGY / BSDGF) and Biem.L.Fdlkk (SHE: 002832) win market share from foreign brands and gain more credibility with domestic consumers.
We believe Biem.L.Fdlkk has an emerging moat in its sub-apparel category driven by its focus on quality, innovation, discipline and long-term culture. This is evident in its 50%+ market share in golf apparel t-shirts in China.
Biem.L.Fdlkk has organically grown both revenue (20% CAGR) and operating profits (21% CAGR) over the past 10 years and remained resilient during the pandemic. Unlike other Chinese-listed peers, Biem.L.Fdlkk grew earnings in 2022.
Its founder, Xie Bingzheng, has led the group over the past 20 years and recently launched an ambitious plan to grow the group’s revenue by 10-fold over the next 10 years.
We view Biem.L.Fdlkk as a focused, high-quality and disciplined apparel group that will continue benefitting from the rising Chinese middle-class consumer, apparel premiumisation and China-Chic trends.
Biem.L.Fdlkk trades at a forward multiple of 19x P/E, and we believe its net income can grow above 20% CAGR over the next 4 years, which is undervalued both intrinsically and relative to its domestic and international peers.
The investment bank’s revenue fell in the first half as weak demand due to economic uncertainty caused its income from advisory services for private share sales to plunge
China Renaissance’s revenue fell about 7% year-on-year in the first half, while its net loss narrowed slightly
The results highlight the company’s challenges as its founder remains absent and economic uncertainty leads to weak fundraising demand from Chinese companies
🇨🇳 Futu charges ahead in Singapore in stepped-up global expansion (Bamboo Works)
The online broker’s client assets under management in the city state posted a fourth consecutive quarter of sequential double-digit gains in the three months to June
The company’s revenue grew 42% during the quarter, as an 8% drop in fee income due to weak market sentiment was more than offset by big interest income gains
🇨🇳 Debt pressures cast cloud over Fosun Pharma results (Bamboo Works)
The drugmaker eked out a 0.16% rise in first-half revenue, but underlying net profit slipped 26% as waning sales of Covid treatments and foreign exchange losses squeezed earnings
Income from new and innovative drugs boosted the company’s core pharmaceutical business, where revenues rose nearly 12% to 15.92 billion yuan
🇨🇳 NetDragon wows investors with its ‘Tale of Two Cities’ (Bamboo Works)
The gaming and education company’s interim results are a lot like the famous Charles Dickens novel, including a feel-good ending to the story
Revenue growth from the company’s gaming business grew 8% year-on-year in the latest reporting period
🇨🇳 Meituan (3690 HK): Strong Bottom Line Growth Will Prove to Be Short-Lived (Smart Karma) $
Besides the macro weakness, we see the company’s growth increasingly be constrained by the business model itself, resulting in only 14% CAGR for bottom line over 2023-25 by our calculation.
We take investors’ indifference to Meituan’s strong bottom line growth for 2023 as a signal they are discounting the sharp deceleration kicking in from 2024. Stay neutral.
This article was originally published in Chinese by Yao Dan of Leiphone, translated and republished with the author’s permission.
TikTok Shop’s “Project S” generated a lot of buzz in markets as well as across the large seller community in China. The consignment model is initially available in the Middle East and UK - with plans to expand to the US (i.e. no plans for Indonesia).
A friend in China has recently investigated and found out: “everything is rather chaotic”, with “inefficient supplier liaison teams, unstable platform traffic, and delayed payment cycles”.
🇨🇳 TUHU Car IPO: The Investment Case (Smart Karma) $
Among independent aftermarket (IAM) stores in China, Tuhu ranked first in terms of both number of stores as of 31 December 2022 and annual automotive service revenue in 2022.
The investment case rests on the return to growth, improving gross margin, a shift to profitability and a return to cash generation.
🇨🇳 TUHU Car IPO: Valuation Insights (Smart Karma) $
In TUHU Car IPO: The Investment Case, we highlighted the key elements of the investment case. In this note, we present our forecasts and discuss valuation.
Our valuation analysis suggests that Tuhu is reasonably priced at the IPO price range. We would participate in the IPO.
🇨🇳 4Paradigm IPO: The Bull Case (Smart Karma) $
4Paradigm (1764934D HK), a leader in enterprise artificial intelligence (AI) in China, is pre-marketing a US$150-200 million HKEx IPO.
4Paradigm was the largest player by revenue in China’s platform-centric decision-making AI market with a market share of 22.6% in 2022, according to CIC.
The bull case rests on the success in increasing key account customer numbers, net dollar expansion rates, improving revenue visibility, strong growth in application development services and reducing loss margin.
🇨🇳 4Paradigm IPO: The Bear Case (Smart Karma) $
The bear case rests on Sage Platform’s rapid slowdown, high customer concentration risk, recent gross margin pressure, FCF burn, rising cash collection cycle and BIS entity list designation.
🇨🇳 Beijing wants its own EUV light source, a key part of the chip supply chain (The China Project) (Archived Article)
A homegrown extreme ultraviolet light source (EUV), or a less-complex alternative, could enable China to manufacture microchips to compete with those that power iPhones and ChatGPT.
Mentions these companies:
Semiconductor Manufacturing International Corporation (SMIC) (SHA: 688981 / HKG: 0981 / FRA: MKN2) [See: Semiconductor Manufacturing International Corp (SHA: 688981 / HKG: 0981 / FRA: MKN2): China's Most Important Chipmaker]
🇹🇼 Advanced packaging is the frontier of semiconductor technology, and TSMC is in the lead (The China Project)
It’s becoming difficult to make microchips smaller, so the encasing around them is where advanced tech is going. Taiwan Semiconductor Manufacturing (TSMC) (NYSE: TSM)'s advanced packaging technology has emerged as a game-changer, with repercussions extending far beyond circuitry for U.S.-Taiwan relations.
You’re going to hear a lot more about advanced packaging in the coming months. Reporting from Taiwan, Silicon Valley, and Arizona, Margaret Siu tells you what you need to know about the technology that will eventually be in every digital device you use.
🇰🇷 Doosan Robotics IPO: Exuberance Results in Valuation Disconnect (Smart Karma) $
Doosan Robotics (454910 KS) IPO has coincided with a fortuitous rerating of peers as robotics has recently emerged as a dominant theme in the Korean stock market.
The risk is that sentiment can quickly shift the other way before the listing. Our bull-case DCF suggests that the IPO price range is, at best, fully priced.
🇹🇭 Thai Beverage update (THBEV SP) (Asian Century Stocks) Partially $
Thai Beverage (“ThaiBev”) (SGX: Y92 / OTCMKTS: TBVPF / TBVPY) is a monopoly in Thailand’s spirits market with an almost 90% market share and ownership of important brands such as Ruang Khao. It also owns the Thai beer brand Chang and the Vietnamese beer brand Saigon.
ThaiBev’s recovery from COVID-19 is now almost complete. The beer segment has benefitted from the reopening of entertainment venues. And its food segment has enjoyed a strong rebound as consumers have returned to its restaurants.
While the Progressive Liquor Act has not passed parliament, the barriers to entry in Thailand’s beer sector have been lowered. ThaiBev will probably see greater competition in the Thai beer segment.
The stock trades at a consensus 2024e P/E of 12x, far lower than the global peer group’s 20x. Do note that ThaiBev has a significant amount of debt, so enterprise value multiples do not show as much discount.
🇨🇭 Nestlé S.A. - expanding its operating efficiencies (IntVestor)
Aplisens (WSE: APN) has seen a surge of sales in 2022 and 2023 (first 6 months) which had a big impact in the profit line where eps has doubled since 2020. Stock trades at a very attractive low 8.8x PE.
Aplisens is a Poland industrial sensor manufacturer trading at the Warsaw Stock Exchange (WSE:APN) who has seen a surge of sales in 2022 and 2023 (first 6 months) which has translated into an even higher increase in profits. My fellow investor @Sutjeinvestor (twitter account) mentioned this name to me in June/July - he also took a position in this stock - and I quickly realized that it ticked all the boxes of a new investment. Many thanks to him!
🇭🇺 Hungarian stocks – worth a closer look? (Undervalued Shares)
There is still a decent amount of research available about MOL Magyar Olaj- és Gázipari Nyilvánosan Muködo Részvénytársaság (BSE: MOL / FRA: MOGB / MOGG / OTCMKTS: MGYOY) (ISIN HU0000153937, BUD:MOL), the state-controlled oil company, Magyar Telekom (BSE: MTEL / LON: 0NUG / FRA: MGYB / OTCMKTS: MYTAY) (ISIN HU0000073507, BUD:MTEL), the national telecoms operator, and OTP Bank (BUD: OTPB / FRA: OTP / OTCMKTS: OTPBF) (ISIN HU0000061726, BUD:OTPB), Hungary's leading bank.
When it comes to MOL's equity, the valuation multiples of its stock are comparable to those of emerging market companies, such as Petrobas (NYSE: PBR / PBR-A) (ISIN BRPETRACNPR6, BR:PBR). Hungary does bear some hallmarks of emerging markets, such as a high inflation rate. On the other hand, it is a European country and a member of the EU.
I suspect that Hungary will offer some surprising finds, such as Kulcs-Soft (BUD: KSOFT / LON: 0MLL) (ISIN HU0000099387, BUD:KSOFT). The specialist for accounting software listed on the Budapest Stock Exchange in 2009, and has since grown its earnings per share at a compound annual growth rate of 19.1%. Kulcs-Soft has paid out every cent of its profits to shareholders as dividends, and not utilised debt or capital issuance.
🇿🇦 Sibanye Stillwater - Cyclically Weak, Politically Horrific, Fundamentally Strong (Calvin's thoughts) $
The total return of Sibanye Stillwater Ltd (NYSE: SBSW) stock over the past 3 years has been abysmal. The stock has under performed every metal they mine, the S&P500, and the South African stock market by a long shot.
I’ve recently started buying SBSW, a name I played from 2017 to 2019 as well for a tidy profit. I think the company is under valued, and despite enormous jurisdictional risks, I think is in a strong position. In this post, I’ll be doing a deep dive on SBSW assets, fundamentals, valuation, shareholder return history, and problems - and tell you why I think it is one of the most under valued large mining companies in the world right now.
🇲🇽 Medica Sur ($MEDICAB) (Heron Hunting Method)
The company over-earned during the COVID era but management capitalized by selling its laboratory business and reinvested in core hospital operations
The market is discounting lower growth without the labs business but the remaining hospital operation has a long and durable growth runway ahead
Conservative balance sheet and owned real estate provide a large margin of safety
0.6x Net Debt/EBITDA
Real estate holdings conservatively valued at $125-165 million (>50% of the market cap)
Laser-focused on returning capital to shareholders via a combination of large dividends and aggressive buybacks
The company is locally listed. It does not have an ADR
Further Suggested Reading
$ = behind a paywall
Banks and local government debt usually grab the headlines when it comes to risks in China’s financial system. But insurance, a sector traditionally associated with caution and prudence, has quietly turned into a slow-burning crisis for regulators.
A crackdown on risky activities among many private insurers linked to troubled financial conglomerates has failed to stem deepening problems in the sector, many of which erupted in 2017 after a string of scandals and the downfall of the head of the insurance regulator.
🇨🇳 China’s balance sheet recession (LGIM)
History suggests downturns caused by debt-financed overinvestment tend to be deeper and longer than those spurred by rate hikes - bad news for China bulls.
🇨🇳 Charted: Six Red Flags Pointing to China’s Economy Slowing Down (Visual Capitalist)
🇨🇳 Chinese Auto Exports Threaten the Auto Industry Worldwide (The Emerging Markets Investor)
Remarkably, in three years, China has gone from almost no participation in auto exports to the leading position. China surpassed Korea in 2021, Germany in 2022, and long-time export leader Japan in 2023.
In the case of ICE cars, most of these exports are going to Russia, Eastern Europe, and developing countries in Asia and Latin America, undermining the competitiveness of manufacturers in those regions. EVs are mainly exported to more developed regions, such as Europe, which have high “climate change” incentives for EV sales, but this is also changing fast. For example, BYD Company (HKG: 1211 / SHE: 002594 / OTCMKTS: BYDDY / BYDDF) has had enormous success exporting electrical buses to major emerging market metropolitan areas suffering from high pollution levels.
New investors’ money is often used to boost dividends that would otherwise be diluted by huge inflows
🇦🇷 An Anarchist’s Pragmatic Plan of Government for Argentina (Mises Institute)
Milei's full plan - which he laid out in some detail on August 2nd, is nothing if not pragmatic from an anarchist point of view.
(6:00) Gender ideology
(11:45) Pope Francis' affinity for dictators
(17:52) Advice to Americans and Donald Trump
(22:23) Climate change
(30:39) Violent political protests
Chip Wars (Voss Capital)
Summary of 'Chips Wars' by Chris Miller, the History of the Semi Conductor Industry and the Potential Geopolitical (and Investing) Implications
The book is broken into eight parts, each of which has a geopolitical motivation for advancement in technology.
Note: Investing.com has a full calendar for most global stock exchanges BUT you may need an Investing.com account, then hit “Filter,” and select the countries you wish to see company earnings from. Otherwise, purple (below) are upcoming earnings for US listed international stocks (Finviz.com):
Click here for the full weekly calendar from Investing.com containing frontier and emerging market economic events or releases (my filter excludes USA, Canada, EU, Australia & NZ).
Frontier and emerging market highlights (from IFES’s Election Guide calendar):
Taiwan will have Presidential elections on January 13, 2024 (Wikipedia entry).
Emerging Market IPO Calendar/Pipeline
(Note: This is NOT an IPO. This is an uplisting to the NASDAQ from the OTC – Pink Sheets market.)
We sell skincare products and dietary supplements through direct sales to distributors in Malaysia. We also operate an advisory services business called the ATP Zeta Health Program. (Incorporated in Nevada)
Agape ATP Corporation provides health solution advisory services to its clients. We primarily focus our efforts on attracting customers in Malaysia. We have an advisory services center called the “ATP Zeta Health Program”, which is a health program designed to effectively prevent diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles, and the promotion of health. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled nutritionists and/or dieticians.
For the three months ended March 31, 2023 and 2022, our revenue was approximately $0.4 million and $0.4 million, respectively, and our gross profit was approximately $0.3 million and $0.3 million. Our total revenues decreased by approximately 6.9% from approximately 0.4 million for the three months ended March 31, 2022 to approximately 0.4 million for the three months ended March 31, 2023. For the years ended December 31, 2022 and 2021, our revenue was approximately $1.9 million and $1.0 million, respectively, and our gross profit was approximately $1.2 million and $0.7 million, respectively. Our total revenue increased by approximately 82.6% from approximately $1.0 million for the year ended December 31, 2021 to approximately $1.9 million for the year ended December 31,2022. Our gross profits decreased by approximately 24.8% from approximately $0.3 million for the three months ended March 31, 2022 to approximately $0.3 million for the three months ended March 31, 2023. Our gross profit increased by approximately 65.4% from approximately $0.7 million for the year ended December 31, 2021 to approximately $1.2 million for the year ended December 31, 2022.
In order to strengthen the Company’s supply chain, on May 8, 2020, the Company successfully acquired approximately 99.99% of Agape Superior Living Sdn Bhd, a Malaysia company (“ASL”), with the goal of securing an established network marketing sales channel that has been established in Malaysia for the past 18 years. ASL has been offering the Company’s ATP Zeta Health Program as part of its product lineup. As such, the acquisition creates synergy in the Company’s operation by boosting the Company’s retail and marketing capabilities. The acquired subsidiary allows the Company to fulfill its mission of “helping people to create health and wealth” by providing a financially rewarding business opportunity to distributors and quality products to distributors and customers who seek a healthy lifestyle.
The Company deems creating public awareness on wellness and wellbeing lifestyle as essential to enhance the provision of its health solution advisory services; and therefore, incorporated Wellness ATP International Holdings Sdn, Bhd. (“WATP”). Upon its establishment, WATP started collaborating with ASL to carry out various wellness programs.
On November 11, 2021, Agape ATP Corporation (Labuan) formed a joint-venture entity, DSY Wellness International Sdn. Bhd. (“DSY Wellness”) with Mr. Steve Yap following which Agape ATP Corporation (Labuan) owns 60% of the equity interest, to pursue the business of providing complementary health therapies. The establishment of DSY Wellness is a further expansion of our business into the health and wellness industry. Mr. Steve Yap readily owns 33 proprietary formulas for treating non-communicable disease which he has agreed to bring into the company for joint commercialization. Mr. Steve Yap also has existing clients receiving traditional complimentary medicine or “TCM” in Indonesia and China.
We offer three series of programs which consist of different services and products: ATP Zeta Health Program, ÉNERGÉTIQUE and BEAUNIQUE.
Our ATP Zeta Health Program is a health program designed to promote health and general wellbeing designed to prevent health diseases caused by polluted environments, unhealthy dietary intake and unhealthy lifestyles. The program aims to promote improved health and longevity through a combination of modern health supplements, proper nutrition and advice from skilled dieticians as well as trained members and distributors.
Our ÉNERGÉTIQUE series aims to provide a total dermal solution for a healthy skin beginning from the cellular level. The series is comprised of the Energy Mask series, Hyaluronic Acid Serum and Mousse Facial Cleanser.
Our BEAUNIQUE product series focuses on the research of our diet’s impact on modifying gene expressions in order to address genetic variations and deliver a nutrigenomic solution for every individual.
The newly established subsidiary DSY Wellness is a further expansion of our business into the health and wellness industry and aims to pursue the business of providing traditional and complementary health therapies.
*Note: Revenue and gross profit are in U.S. dollars for the 12 months that ended June 30, 2023.
(Note: Agape APT Corp. increased the number of shares in its IPO to 1.65 million shares – up from 1.1 million shares – and cut the price to $4.00 – down from a range of $5.50 to $6.50 – to raise $6.6 million in its public offering/NASDAQ uplisting, according to an S-1/A filing dated Sept. 7, 2023. In an S-1/A filing dated Aug. 24, 2023, Agape APT Corp. disclosed that Network 1 Financial Securities was the sole book-runner, replacing EF Hutton. This public offering’s size and price range have undergone several changes since the S-1 was filed on April 12, 2022; in the S-1, Prime Number Capital was the sole book-runner. The company originally filed to go public in July 2020.)
We are an early-stage esports company focused on developing and organizing esports events in Pakistan. (Incorporated in Delaware)
We are a development-stage interactive esports event promotion and product marketing company, founded in November 2021. Our initial focus is on creating college, inter- university and professional esports events for both men’s and women’s teams, particularly esports opportunities with colleges and universities in Pakistan. The Government of Pakistan’s 2021-22 Pakistan Economic Survey estimated that from 2020-21 there were approximately 500,000 students enrolled in technical and vocational education, approximately 760,000 in degree-awarding colleges, and 1.96 million students in universities.1 Though the foregoing likely will remain our focus for at least 12 months, over time, we intend to expand the range of our esports offerings, expand to other markets and eventually consider live sports. We will endeavor to integrate competitive events that include our teams and leagues with regional and global teams and leagues sponsored by others.
Pakistan is a large market for esports. Pakistan is the fifth most populous country in the world, with a current population estimated to be approximately 231 million persons. The median age in Pakistan is 22.8 years, and 35.1% of the population is urban (77,437,729). Mobile cellular subscriptions have grown at an astounding rate in Pakistan, with 79.51% of the inhabitants having a mobile cellular subscription in 2020 compared to only 0.22% in 2000. Approximately 36.8 million persons in Pakistan have been estimated to play video games in 2022, and the number is expected to increase to 50.9 million by 2026.
We plan to conduct our operations in Pakistan through K2 Gamer (PVT) Ltd. (“K2 Gamer”), and Elite Sports Pakistan Pvt. Ltd. (“ESP”), each a company duly incorporated under the laws of Pakistan. Pursuant to agreements with the three owners of K2 Gamer, we acquired 90% ownership of K2 Gamer on July 10, 2023 when the transfer was approved by the Securities and Exchange Commission of Pakistan (“SECP”). We will account for the transfer as an acquisition of a business under the provisions of ASC 805. To date all activities have been conducted by K2 Gamer and ESP, and not the Company, although the Company has received public recognition as a sponsor for many of the tournaments.
As a result of the assignment to K2 Gamer by ESP of all of its rights with respect to the exploitation of esports, ESP is an affiliate of K2 Gamer and, as a result of the acquisition by us of 90% of the stock of K2 Gamer, ESP now is our affiliate as well. For purposes of this prospectus, we have assumed, except where otherwise stated, that K2 Gamer has been our subsidiary and that ESP has been our affiliate during the periods mentioned. Mr. Muhammed Jamal Qureshi is an owner of K2 Gamer and ESP as well as CEO and a director of K2 Gamer and ESP.
Esports are the competitive playing of video games by amateur and professional teams or individuals for cash and other prizes. Esports typically take the form of organized, multiplayer video games that include real-time strategy and competition, including virtual fights, first-person shooter and multiplayer online battle arena games. The games are played on dedicated hardware (consoles), personal computers (PCs), or a range of mobile devices including smart phones and tablets. Unlike games of chance or luck, esports are defined as competitive games of skill, timing, knowledge, experience, practice, attention and teamwork. Tournaments can be held using consoles, PCs, mobile devices, or a combination of the foregoing. Competitors participate at large in-person events, small in-person events and virtually from home or computer cafes.
Between November 2021 and November 2022, we organized and held 27 separate championships, including the first “Annual University Esports National Tournament and Championship on June 30 through July 1 of 2022. In December 2022 we held the week-long inaugural National Esports Free Fire Championship. During 2023, K2 Gamer and/or ESP are expected to organize and conduct at least 18 championships. There were no paying sponsors for these championships, as a result of which we recognized no revenue from them. We believe that we will be able to gain paying sponsors as the championships gain popularity.
*Note: Revenue and net loss figures are for the year ended Dec. 31, 2022.
(Note: The company is offering 1.7 million shares at $4.00 to $5.00 to raise $7.65 million. In an S-1/A filing dated Sept. 6, 2023, Gamer Pakistan Inc. disclosed an increase in the number of shares that selling stockholders planned to offer: 1.71 million shares (1,706,329 shares). The company will NOT receive any proceeds from the sale of the selling stockholders’ shares.)
(Note: Gamer Pakistan Inc. filed an S-1/A dated Aug. 17, 2023, disclosing that the number of shares that selling stockholders planned to offer had been cut to 1.17 million shares – down from 2.9 million shares. The company will NOT receive any proceeds from the sale of the selling stockholders’ shares. The IPO’s primary portion and size remain the same: The company is offering 1.7 million shares at $4.00 to $5.00 to raise $7.65 million.)
(Background: Gamer Pakistan Inc. filed its S-1 on July 12, 2023, and disclosed terms for its IPO: 1.7 million shares at $4.00 to $5.00 to raise $8.0 million. Selling stockholders are offering up to 2.9 million shares (2,290,429 shares) of common stock. The company will NOT receive any proceeds from the sale of the selling stockholders’ shares.)
Healthy Green Group Holding Ltd. is a Hong Kong-based chain of 22 organic grocery stores under the Greendotdot brand. (Incorporated in the Cayman Islands) **Note: Investors in this offering (the IPO) are buying shares of the Cayman Islands (holding) company whereas all of our operations are conducted through our Operating Subsidiaries. At no time will the Company’s shareholders directly own shares of the Operating Subsidiaries.
We are a Hong Kong-based retailer principally engaged in the sale of natural and organic food under our “Greendotdot” brand. Our Group’s history can be traced back to 1999 when Mr. Wong and Ms. Cheuk started the business of marketing natural and organic foods. The same year, we launched our first retail store with the objective to introduce quality products from local and overseas suppliers to our customers. Over the years, we have been building our “Greendotdot” brand by sourcing, procuring, marketing and selling a wide variety of quality products, which can be broadly classified into (i) packaged foods; (ii) fresh foods; (iii) frozen foods; and (iv) other products such as honey, beverages, edible oils, seasonings and other non-food items.
We offer a diversified portfolio of over 600 products sourced from over 134 suppliers, which we market through established sales channels, including 22 retail stores in Hong Kong under our brand “Greendotdot” as of Dec. 31, 2022. The retail stores are strategically located in Metrorail stations, residential areas or shopping complexes, which are prime locations with high pedestrian traffic. Other established sales channels include our online sales platforms, exhibitions and through supermarkets and department stores, and wholesale sales to bulk-purchase customers.
According to the Frost & Sullivan Report, our Group ranked as the second-largest natural and organic food retail chain in Hong Kong in terms of our revenue, translating to a market share of approximately 7.9% in the natural and organic food market in Hong Kong in 2021. For the years ended Dec. 31, 2020, and 2021, and the six-month period ended June 30, 2022, our Group’s revenue amounted to approximately HK$166,853,000, HK$159,546,000 (US$20,527,000) and HK$80,430,000 (US$10,278,000), respectively. Our net profit was approximately HK$12,427,000, HK$4,013,000 (US$516,000) and HK$1,338,000 (US$170,000) for the respective years/period.
**Note: Revenue and net income (in the chart below) are in U.S. dollars for the year that ended Dec. 31, 2022.
(Note: Healthy Green Holding Ltd. filed an F-1/A dated April 28, 2023, in which it changed its listing venue to the NYSE – American Exchange from the NASDAQ and changed its proposed symbol to “GDD” from “HGRN,” which was the original proposed symbol for the NASDAQ listing.)
(Note: Healthy Green Holding Ltd. disclosed the terms for its IPO – 2.0 million shares at a price range of $6.00 to $7.00 to raise $13.0 million – in an F-1/A dated July 12, 2023. Healthy Green Holding Ltd. filed its F-1 on Feb. 16, 2023. The company submitted confidential IPO documents to the SEC on April 26, 2022.)
Maison Solutions is a specialty Asian grocery retailer. (Incorporated in Delaware)
We are a fast-growing specialty grocery retailer offering traditional Asian food and merchandise to modern U.S. consumers, in particular to members of Asian-American communities. We are committed to providing Asian fresh produce, meat, seafood, and other daily necessities in a manner that caters to traditional Asian-American family values and cultural norms, while also accounting for the new and faster-paced lifestyle of younger generations and the diverse makeup of the communities in which we operate. To achieve this, we are developing a center-satellite stores network.
Our merchandise includes fresh and unique produce, meats, seafood and other groceries which are staples of traditional Asian cuisine and which are not commonly found in mainstream supermarkets, including a variety of Asian vegetables and fruits such as Chinese broccoli, bitter melon, winter gourd, Shanghai baby bok choy, longan and lychee; a variety of live seafood such as shrimp, clams, lobster, geoduck, and Alaska king crab, and Chinese specialty products like soy sauce, sesame oil, oyster sauce, bean sprouts, Sriracha, tofu, noodles and dried fish. With an in-house logistics team and strong relationships with local and regional farms, we are capable of offering high-quality specialty perishables at competitive prices.
Our multi-pronged approach allows us to provide customers with multiple shopping channels, including integrated online and offline operations, according to Maison Solutions Inc.’s website.
“Customers can place orders on our mobile app “FreshDeal24,” or through our WeChat Applet “Good Luck to Home” for either home delivery or in-store pickup,” the company’s website says.
*Note: Revenue and net income are for the 12 months that ended April 30, 2023.
(Note: Maison Solutions Inc. cut its IPO’s size by 25 percent to 3.0 million shares – down from 3.75 million shares – and kept the assumed IPO price at $4.00 – to raise $12.0 million, according to a post-effective amendment dated Aug. 1, 2023. In that same SEC filing, the company updated its financial statements for the year that ended April 30, 2023. Maison Solutions Inc. filed an S-1/A dated June 2, 2023, in which it increased the size of its IPO – to 3.75 million shares – up from 3.0 million shares – and kept the assumed IPO price at $4.00 – to raise $15 million. Under the new terms, Maison Solutions will raise 25 percent more than the $12 million in estimated IPO proceeds under its original terms. Background: Maison Solutions filed its S-1 on May 22, 2023, after submitting confidential IPO documents to the SEC on Dec. 23, 2022.)
We are a 3D printing company. (Incorporated in Israel)
We develop and manufacture unique additive manufacturing solutions that jet directly the actual materials from which the parts are being made. Our patented technology is based on a Nano-Particles Jetting (NPJ) process that creates extremely thin layers of ceramics or metal material. This technology enables the production at scale of geometrically complex and high-quality metal and ceramic end-use parts that are otherwise difficult or impossible to produce. Our complete solution includes hardware, software, and consumable materials, and supports multiple industries and use cases. Such a solution enables automated, cost-effective, safe, and environmentally friendly manufacturing of parts.
Our solution provides an opportunity for part manufacturing with a wide range of complex geometry designs. When using traditional manufacturing technologies, it is either unfeasible or requires additional manual and machining labor, making the production of such end-use parts with similar geometry designs more expensive and time consuming.
**Note: Net loss and revenue are for the year ended Dec. 31, 2022.
(Note: XJet Ltd. cut its IPO by 36 percent to 1.6 million shares – down from 2.0 million shares – and cut the IPO price to $4.00 – down from its previous range of $4.00 to $6.00 – to raise $6.4 million, according to an F-1/A dated July 19, 2023. Background: XJet Ltd. filed terms for its IPO in an F-1/A dated May 25, 2023: 2.0 million shares at $4.00 to $6.00 to raise $10.0 million. Background: XJet Ltd. filed its F-1 on April 21, 2023. The Israeli company filed confidential IPO documents with the SEC on Dec. 30, 2022.)
Emerging Market ETF Launches
Climate change and ESG are clearly the latest flavours of the month for most new ETFs. Nevertheless, here are some new frontier and emerging market focused ETFs:
08/18/2023 - Global X India Active ETF NDIA - Active, equity, India
08/18/2023 - Global X Brazil Active ETF BRAZ - Active, equity, Brazil
07/17/2023 - Matthews Korea Active ETF MKOR - Active, equity, South Korea
05/18/2023 - Putnam Emerging Markets ex-China ETF PEMX - Value + growth stocks
05/11/2023 - JPMorgan BetaBuilders Emerging Markets Equity ETF BBEM - Large + midcap stocks
03/16/2023 - JPMorgan Active China ETF JCHI - Active, equity, China
03/03/2023 - First Trust Bloomberg Emerging Market Democracies ETF EMDM - Principles-based
1/31/2023 - Strive Emerging Markets Ex-China ETF STX - Passive, equity, emerging markets
1/20/2023 - Putnam PanAgora ESG Emerging Markets Equity ETF PPEM - Active, equity, ESG, emerging markets
1/12/2023 - KraneShares China Internet and Covered Call Strategy ETF KLIP - Active, equity, China, options overlay, thematic
1/11/2023 - Matthews Emerging Markets ex China Active ETF MEMX - Active, equity, emerging markets
12/13/2022 - GraniteShares 1.75x Long BABA Daily ETF BABX - Active, equity, leveraged, single stock
12/13/2022 - Virtus Stone Harbor Emerging Markets High Yield Bond ETF VEMY - Active, fixed income, junk bond, emerging markets
9/22/2022 - WisdomTree Emerging Markets ex-China Fund XC - Passive, equity, emerging markets
9/15/2022 - KraneShares S&P Pan Asia Dividend Aristocrats Index ETF KDIV - Passive, equity, Asia, dividend strategy
9/15/2022 - OneAscent Emerging Markets ETF OAEM - Active, Equity, emerging markets, ESG
9/9/2022 - Emerge EMPWR Sustainable Select Growth Equity ETF EMGC - Active, equity, emerging markets
9/9/2022 - Emerge EMPWR Unified Sustainable Equity ETF EMPW - Active, equity, emerging markets
9/8/2022 - Emerge EMPWR Sustainable Emerging Markets Equity ETF EMCH - Active, equity, emerging markets, ESG
7/14/2022 - Matthews China Active ETF MCH - Active, equity, China
7/14/2022 - Matthews Emerging Markets Equity Active ETF MEM - Active, equity, emerging markets
7/14/2022 - Matthews Asia Innovators Active ETF MINV - Active, equity, Asia
6/30/2022 - BondBloxx JP Morgan USD Emerging Markets 1-10 Year Bond ETF XEMD - Passive, fixed income, emerging markets
5/2/2022 - AXS Short CSI China Internet ETF SWEB - Active, inverse, thematic
4/27/2022 - Dimensional Emerging Markets High Profitability ETF DEHP - Active, equity, emerging markets
4/27/2022 - Dimensional Emerging Markets Core Equity 2 ETF DFEM - Active, equity, emerging markets
4/27/2022 - Dimensional Emerging Markets Value ETF DFEV - Active, equity, emerging markets
4/27/2022 - iShares Emergent Food and AgTech Multisector ETF IVEG - Passive, equity, thematic [Mostly developed markets]
4/21/2022 - FlexShares ESG & Climate Emerging Markets Core Index Fund FEEM - Passive, equity, ESG
4/6/2022 - India Internet & Ecommerce ETF INQQ - Passive, equity, thematic
2/17/2022 - VanEck Digital India ETF DGIN - Passive, India market, thematic
2/17/2022 - Goldman Sachs Access Emerging Markets USD Bond ETF GEMD - Passive, fixed income, emerging markets
1/27/2022 - iShares MSCI China Multisector Tech ETF TCHI - Passive, China, technology
1/11/2022 - Simplify Emerging Markets PLUS Downside Convexity ETF EMGD - Active, equity, options strategy
1/11/2022 - SPDR Bloomberg SASB Emerging Markets ESG Select ETF REMG - Passive, equity, ESG
Emerging Market ETF Closures/Liquidations
Frontier and emerging market highlights:
08/01/2023 - VanEck Russia ETF - RSX
07/07/2023 - Emerge EMPWR Sustainable Emerging Markets Equity ETF - EMCH
06/23/2023 - Invesco PureBeta FTSE Emerging Markets ETF - PBEE
06/16/2023 - AXS Short China Internet ETF - SWEB
04/11/2023 - SPDR Bloomberg SASB Emerging Markets ESG Select ETF - REMG
3/30/2023 - Invesco BLDRS Emerging Markets 50 ADR Index Fund - ADRE
3/30/2023 - Invesco BulletShares 2023 USD Emerging Markets Debt ETF - BSCE
3/30/2023 - Invesco BulletShares 2024 USD Emerging Markets Debt ETF - BSDE
3/30/2023 - Invesco RAFI Strategic Emerging Markets ETF - ISEM
2/17/2023 - Direxion Daily CSI 300 China A Share Bear 1X Shares - CHAD
1/13/2023 - First Trust Chindia ETF - FNI
12/28/2022 - Franklin FTSE Russia ETF - FLRU
12/22/2022 - VictoryShares Emerging Market High Div Volatility Wtd ETF CEY
8/22/2022 - iShares MSCI Argentina and Global Exposure ETF AGT
8/22/2022 - iShares MSCI Colombia ETFI COL
6/10/2022 - Infusive Compounding Global Equities ETF JOYY
5/3/2022 - ProShares Short Term USD Emerging Markets Bond ETF EMSH
4/7/2022 - DeltaShares S&P EM 100 & Managed Risk ETF DMRE
3/11/2022 - Direxion Daily Russia Bull 2X Shares RUSL
1/27/2022 - Legg Mason Global Infrastructure ETF INFR
1/14/2022 - Direxion Daily Latin America Bull 2X Shares LBJ
Check out our emerging market ETF lists, ADR lists (updated) and closed-end fund (updated) lists (also see our site map + list update status as some ETF lists are still being updated as of Summer 2022).
I have changed the front page of www.emergingmarketskeptic.com to mainly consist of links to other emerging market newspapers, investment firms, newsletters, blogs, podcasts and other helpful emerging market investing resources. The top menu includes links to other resources as well as a link to a general EM investing tips / advice feed e.g. links to specific and useful articles for EM investors.
Disclaimer. The information and views contained on this website and newsletter is provided for informational purposes only and does not constitute investment advice and/or a recommendation. Your use of any content is entirely at your own risk and it is your sole responsibility to evaluate the accuracy, completeness and usefulness of the content. Seek a duly licensed professional for any investment advice. I may have positions in the investments covered. This is not a recommendation to buy or sell any investment mentioned.
Emerging Market Links + The Week Ahead (September 18, 2023) was also published on our website under the Newsletter category.